Beneficiary must be qualifying for one year before disposal for entrepreneurs' relief

In July 2015 three beneficiaries were given interests in possession under the Skinner settlements. In August 2015 the settlor gave 55 000 D ordinary shares in DPAS Ltd to each settlement. The beneficiaries already each held 32 250 C shares making DPAS Ltd their personal company for the purpose of TCGA 1992 s 169S. In December 2015 the settlements disposed of the shares. The settlements and the beneficiaries claimed entrepreneurs’ relief (s 169M).

HMRC refused relief saying the beneficiaries had not held an interest in possession in the shares held by the trusts for one year. It was accepted that the beneficiaries were officers of the company and that it was trading. The issue was whether s 169J(4) also required the beneficiaries to have been qualifying beneficiaries for a period of one year ending not earlier than three years before the disposal.

After the First-tier...